NSW Premier
Mike Baird
and state ­Liberal Party director
Tony Nutt
are pursuing a two-pronged attack on the ethical lapses that have tainted state politics.

Mr Baird announced on Thursday a new, tougher ministerial code would be introduced into parliament in ­September, in response to ­recommendations by the Independent Commission Against Corruption.

Separately in a letter sent to the ­Premier by Mr Nutt, and obtained by The Australian Financial Review, the state director wrote that NSW division of the Liberal Party would no longer accept funds from the controversial Free Enterprise Foundation.

“[T]he Division will decline any donation from the foundation made in support of our campaign to win the 2015 State election. “I also confirm that the Millennium Forum has ceased to operate," Mr Nutt writes in the letter dated August 20.

NSW politics has convulsed with allegations of illegal donations and dodgy fund-raising vehicles that have been used to “wash" funds and ­circumvent state laws.

Two members of parliament, Andrew Cornwell and Tim Owens, have resigned from parliament after being exposed for taking illegal ­donations from property developers. Another six members have stood aside from the party. The former head of the Millennium Forum,
Paul Nicolaou
and Senator
Arthur Sinodinos
, who was the former chairman of the state finance ­committee, are due to appear before ICAC’s Operation Spicer investigation into political fund-raising.

In the letter to the premier Mr Nutt also advises that a new entity, “the ­Federal Forum", had been created “entirely for the purposes of Federal fund-raising and neither receives nor disperses money for State elections."

The ICAC has alleged the ­foundation was used in the 2011 election to ­channel prohibited donations to the NSW ­Liberals.

Property developers have been banned from donating to political ­parties in the state since 2009. Since ­January 2011, donations to a state ­campaign have been capped at $5000, ­limiting the usefulness of ­donations from the Free Enterprise Foundation.

The ICAC is investigating the use of the foundation in late 2010 before the $5000 cap was introduced .

Mr Nutt also writes in the letter to the Premier a mandatory contract for all MPs and candidates was being drafted by the state executive that would place strict conditions on “the receipt and use of donations".

“In particular, the contract will make it a condition of continuing ­endorsement by the Party that ­obligations both to the Party and under State electoral law are complied with."

Separately on Thursday, Mr Baird announced a toughening of the NSW ministerial code.

The new code, which the Premier dubbed “ICAC-able" during ­estimates, will be introduced into parliament in September. The changes were ­recommended in 2013 by ICAC after its ­investigation, Jasper and Acacia, into the conduct of disgraced former Labor ministers Ian Macdonald and Eddie Obeid.

The new code will prohibit ­ministers, either directly or via their staff, from demanding that NSW ­government agencies change ­recommendations.

“It’s a very significant step forward, I think, for ethics in this state," Mr Baird said.

The code will also strengthens the requirements for disclosure of the pecuniary interests of ministers and their immediate family members.